In the time of the Covid19 coronavirus the relevancy of this topic is unprecedented, and gives an advantage for companies to make a step towards living the Future of Work that should not come to an end once the virus does.
At MVPF, we believe that geography is one of the greatest limitations to innovation and growth. In a trend that is showing no signs of slowing down, remote work is rapidly on the rise all around the world and has potential to eliminate this barrier. A new labor model of remote work is changing how the global workspace operates.
There is no doubt that the trend of employees working in a decentralized fashion is only going upward. At the Fortune Global Forum in 2019 Stephane Kasriel, the CEO of Upwork argued in favour of a corporate policy which benefits both employers and employees: companies should not only adjust too, but encourage a more remote workforce (Upwork, 2019).
The staffing company Upwork also conducted a study in 2019 which found that 63% of U.S. companies employ at least some part of their employees remotely (Upwork, 2019). Additionally, 35% of the workforce is relying on freelance work. This makes the GDP of freelancing as an “industry” higher than the GDP of other major industries such as construction or transportation (Upwork, 2019).
Consequently, it is crucial for CEO’s and employers alike to ask questions as to what this development will look like and what its implications are.
The rise of remote work and of the gig economy go hand in hand. The gig economy refers to a market system in which temporary, flexible jobs are commonplace and companies tend to hire independent contractors and freelancers instead of full-time employees. It can be traced back to factors such as the shift to the knowledge economy, a changing demographic makeup of the labour force, and most importantly the growth of elastic staffing.
In a report from the National Bureau of Economic Research, leading economists found that between 2005 and 2015 about 94% of net new employment in the U.S. has been from alternative work- this includes gig to freelance as well as off-balance-sheet types of work (Katz & Krueger, 2019). Since then, the ever-increasing rise of short-term employment has shown that the gig economy is here to stay.
Remote work allows to access untapped talent pools
The benefits of transforming to the gig economy is driven by necessity. The worldwide shortage of development talent has recently gained much attention in research and the media. A report by Gartner identifies talent shortage as one of the major emerging risks that global organisations are facing at the moment (Gartner, 2019). “It's so hard to find talent because you're looking in the same place as everyone else," states Kasriel "In San Francisco, if you’re not Facebook or Google and you need a machine learning expert, it’s completely impossible” (2019, Fortune Conferences). And this shortage will only get bigger: in the tech sector alone, the U.S. could make a loss of about $162billion in annual revenue if it doesn’t address its lack of tech talent. In Europe the situation does not look much different (kornferry, 2018).
Working with remote and distributed teams enables companies to tap into untapped talent pools. In the vastly changing, flat world we live in, the odds that a company has the best talent in the world within their own stock of engineers is low. If you are facing a challenge, why would you limit yourself simply to the talent within your own company. Hiring remotely, companies can access the best talent across the world and no longer be constrained to finding people that live within reach from the office.
Along this goes the notion of jobs becoming separated from companies - and companies becoming platforms. There is a fundamental shift happening in the nature of work. Lawrence Katz- Harvard Economist- named this the future of “self-sufficient artisans” (Gigster, 2018). In this new working environment there will be a large scale transition towards talent management platforms for the matching and managing of talent, just as the retail sector transitioned from conventional stores to platforms as Amazon.
Further, hiring talent permanently does not guarantee that positions will permanently be filled. According to Christopher Null, one of the main concerns of tech companies is new hires leaving within six months of starting a new position (Hewlett Packard Enterprise, 2017). Hiring elastically eliminates this issue, as it allows companies to speedily scale teams and hire on demand. Companies hiring remotely are not only ought to be more scalable and cost-efficient, but also have the potential to be more diverse than “centralized” teams.
Diversity as a superpower
In today’s world there is no doubt that corporate diversity is important. When a team has more diversity, there is no shortage of fresh ideas, new potential solutions, and outcomes and results have the tendency to be better.
One of the biggest benefits of being a remote company is the fact that you have access to a wider pool of candidates to choose from. Being able to hire in a location-independent world means a greater chance of diversity-by-default, allowing to hire outside one’s own community (race, class, gender) simply due to availability. It allows for more diversity due to hiring requirements shifting from focusing on applicants themselves to focusing on applicant’s work. Workforce diversity is a major problem across industries, but has been especially amplified within the tech industry. The tech world is known to be skewed toward white male workers, particularly Silicon Valley but also in European tech hubs. Hiring remotely addresses some of the underlying issues as it avoids the need to relocate and enables a geographically and racially diverse group of people to apply for jobs without leaving their local communities.
Additionally, research shows that 42% of remote companies have female leaders (Loubier, 2019). In comparison to women holding only 29% of senior roles within companies overall, this suggests that remote work is removing some of the barriers to women reaching top positions (Catalyst, 2019). For instance, remote work creates room for better work-life integration by eliminating problems that are especially damaging to new mothers such as inflexible work schedules and the need to be away from home for long periods of time.
Barriers to remote work
Whether it be because of generational differences, fearing the unknown, or a lack of understanding about remote work and elastic staffing, many are still not comfortable with employees working remotely. Often this is caused by a lack of trust towards employees’ work ethic. Even though research clearly suggests that remote workers are often more dedicated and productive, some leaders still fear that productivity will suffer if employees are surrounded by the distractions of their own homes.
The view that employees should work only at the office and the worry that a person who works remotely cannot be trusted- as it is often the case in more conservative organisations- is a notion that must change. In order to do so, the focus should rather be on the results and less on controlling employees’ ways to achieve them. Meanwhile, the measurement of results needs to be data driven and companies should actively facilitate sharing knowledge about remote work in order to counteract biases.
While communication is already crucial in the office, it is even more critical in the digital workplace. Employers often fear a lack of dialogue and connectivity if workers are not located in an office, as team members do not have the possibility to just go by someone’s desk to ask a question. However, as technology has gotten better, it has also evolved to specifically meet the needs of remote workers. Innovation in the digital workspace has led to major advancements in communication, finance, project management, and much more.
Outlook for 2020
There are many reasons to be optimistic about the future of remote work. Ensuring that this future will be bright for both employers and employees, it will require key stakeholders such as business leaders, educators and policy leaders to set aside traditional ideas and embrace change. Organisations will need to let go of conventional approaches for sourcing, retaining, and motivating talent.
Similarly to the way that the shift from on-premise to cloud computing has reshaped industries, eliminating geography as a constraint to company building can be potentially as transformative. It provides the opportunity to build teams more cost-effective, scalable and diverse. In today’s economy, where talent is a company’s most valuable resource, the value added by remote work cannot be understated. MVPF has been pushing for transformation towards a working environment that supports remote teams for over three years now and we will continue to share knowledge about our experiences with working remotely. Being forced to work remotely in the light of the current Covid-19 coronavirus also provides companies with the opportunity to take proactive steps towards the Future of Work. Hopefully, the implications of these steps will go beyond efforts to prevent the spread of the coronavirus and enable companies to make long-term adjustments that utilize the advantages of remote work.